What the Company Does 💼
Hormel Foods is a 119-year-old U.S. packaged-foods company behind well-known brands such as SPAM, Skippy, Jennie-O, Applegate, Planters, and Columbus. It operates across three platforms — Retail, Foodservice, and International — offering everyday food products that generally provide steady demand. Its core strength comes from brand recognition, scale, and long-term consumer loyalty.
Financial Highlights 📊
- Net sales reached about $12.1 billion in FY2025, with growth across all three segments.
- Profitability weakened due to higher pork, beef, and nut costs plus non-cash impairment charges.
- Operating income and net earnings both declined, while cash flow still supported capital spending and dividends.
- Management continues to invest in efficiency programs such as the Transform and Modernize (T&M) initiative.
Key Risks ⚠️
- Volatile agricultural inputs such as pork, turkey, grains, and nuts can pressure margins.
- Food safety issues, recalls, or livestock diseases (e.g., HPAI) can disrupt supply.
- Competition from private-label brands and shifting consumer preferences affects demand.
- Climate-related events and regulatory changes may increase costs or impact production.
MD&A Overview 📘
Management emphasizes that FY2025 was a challenging year: sales improved, but profits declined due to cost inflation and impairments. Cash flow remained solid, and Hormel continued investing in modernization, restructuring, and brand support. For FY2026, the company expects modest organic sales growth, better margins, and higher adjusted EPS, while recognizing ongoing inflationary and macroeconomic risks.
Takeaway for Beginners 🧭
Hormel is a stable, brand-driven food company with steady demand but slower growth. FY2025 showed resilience in sales but pressure on profitability. The company remains financially sound, continues to invest for long-term efficiency, and maintains a strong dividend profile, making it more of a defensive, income-oriented stock rather than a high-growth opportunity.
📊 Key Financial Ratios
All ratios are based on reported figures. Margins are calculated as a percentage of revenue. ROE and ROA use net income divided by year-end equity and assets, respectively.
| Ratio | 2023 | 2024 | 2025 |
|---|---|---|---|
| ROE (%) Return on Equity = Net income / Equity | 10.3 | 10.1 | 6.0 |
| ROA (%) Return on Assets = Net income / Total assets | 5.9 | 6.0 | 3.6 |
| ROTC (%) Operating income / (Equity + Long-term debt) | 10.6 | 9.8 | 6.7 |
| ROIC (%) After-tax operating profit / Invested capital | 8.1 | 8.2 | 5.1 |
| Gross Margin (%) | 16.5 | 17.0 | 15.6 |
| Operating Margin (%) | 8.9 | 9.0 | 5.9 |
| Pretax Margin (%) | 8.4 | 8.7 | 5.5 |
| Net Margin (%) | 6.6 | 6.8 | 4.0 |
| Debt-to-Equity (D/E) (%) Total interest-bearing debt / Equity | 42.8 | 35.7 | 36.1 |
| Net Debt / EBITDA (x) Net debt / EBITDA | 1.9 | 1.6 | 2.2 |
| Interest Coverage (x) Operating income / Interest expense | 14.6 | 13.2 | 9.2 |
| Current Ratio (%) Current assets / Current liabilities | 142.6 | 232.0 | 246.6 |
| Quick Ratio (%) (Cash + securities + receivables) / Current liabilities | 67.9 | 113.2 | 107.8 |
| Fixed Asset to Long-term Capital (%) PPE / (Equity + Long-term debt) | 21.4 | 20.2 | 20.8 |
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 Hormel Foods (HRL) 2025 10-K Analysis (Filed 2025) | Explained for Beginners